Tech

Reason Why SOL’s Upside Is Capped At $20

01/10/2023
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Solana has displayed a rather extraordinary new year as the network’s native crypto SOL recorded a massive rally in the past few days. The recent price surge followed a strong bullish momentum that could see Solana continue its upward trajectory in the near term. However, the upside for the Solana price seems to be capped at $20 as bulls try to increase their buying pressure but bears are putting up a good fight.

At the time of writing, the SOL price is currently trading at $15.97, after losing 2.85% in the last 24 hours. At #11 on CoinMarketCap, Solana has a live market cap of $5.97 billion and a 24-hour trading volume of $1.44 billion, which is 10.7% above the volume recorded in Monday’s trading session.

Solana Introduces New Protocols For Real-World Uses

In 2022, the Solana community was focused on bringing crypto into the real world. The move was typified when the Solana blockchain introduced two new protocols from Solana Labs, seeding an entire ecosystem of new projects.

The Solana Mobile Stack and Solana Mobile’s flagship device Saga, announced in June, aimed to free web3 from desktops while increasing mobile –App friendliness. Saga was also meant to introduce a near-hardware wallet level of security to mobile devices, thereby, uniting security and simplicity.  

Among the first Saga development kits is DVT-1, whose shipping began in December and consumer units are expected to ship in early 2023.

Similarly, Solana Pay, to be  introduced in February, also enabled a frictionless, permissionless payment ecosystem. Now, stores and brands use it. It will continue to grow across the year.

Google Cloud also disclosed running a block-supporting Solana validator, alongside plans to extend support for Blockchain Node Engine to Solana. Resultantly, anyone can run a validator in the cloud while indexing Solana data for easier historical research in Big Query, regardless of their location in the world.

Brave also integrated Solana into their wallet in 2022, giving default support to Solana dApps in their mobile and web browsers. 

In general, 2022 was the year when traditional companies took notice of the powerhouse that is the Solana ecosystem. Following a series of bugs in the spring of 2022, the core Solana engineers in collaboration with the greater Solana ecosystem have committed to improving the network.

By many metrics, these efforts have thrived as the Solana network has grown in stability and speed, and is much more decentralized, thus begging the question of why the SOL price upside may be capped at $20.

Will Solana Breach The $20 Cap?

Solana price has recorded a series of higher lows over the past few days to form an ascending trendline. This is a bullish formation that may see the SOL price pump higher if bulls can sustain SOL above the uptrend line.

Currently, the SOL price at $15.97 relies on support provided by the 50-day Simple Moving Average (SMA) at $12.95 to sustain the uptrend. If the bulls can increase their buying pressure above the ascending trendline, then they may target the next barrier at $19.98, embraced by the 100-day SMA. Such an outcome would signify a 24.7% increase from the current price.

From the technical setup on the chart below, Solana’s upside could be capped at the said level because there is a large liquidity area above that saw the smart contracts token plummet 65% between November 6 and 9, at the height of the FTX saga. This zone will prove challenging to buyers who may wish to push the price beyond $20.

SOL/USD Daily Chart

Solana Price Chart
TradingView Chart: SOL/USD

However, the technical indicators favor Solana’s upside a both the relative strength index (RSI) and moving average convergence divergence (MACD) indicators were moving upwards, a sign that there were still more buyers than sellers in the market. The value of the RSI at 70 close of the overbought region affirmed the buyers’ grip on SOL.

On the other hand, if bears regain control of the SOL market, they may pull the price below the ascending trendline. As such, the Solana price could lose the support offered by the 50-day SMA at $15.07. If this happens, Solana price could plunge further to retest the next support at $9.51 and in extreme cases, reach the range low at $7.97.

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Source: https://insidebitcoins.com/news/solana-price-prediction-reason-why-sols-upside-is-capped-at-20